How you accept online payments will determine the scale of your online profits. All merchant accounts are not alike. Of course, this faulty assumption has lead to much e-commerce frustration - and more than one e-business crisis.
You find the best merchant account for your business model, and for the types of goods you sell. Most Independent Sales Organizations (ISO) offer merchant accounts and the ability to process online credit card transactions in exchange for a transaction fee and a percentage of sales. Unlike banks, ISOs are generally more tolerant of high-risk accounts because they are not monitored or as tightly regulated. In fact, much of their business comes from companies that cannot obtain merchant accounts from banks directly.
Some providers are very reputable; some are not. It is important that you you do some research before settling on one particular merchant account provider.
Customer Service: Communication is critical. Make sure your merchant account provider has the customer care platform to swiftly and reliably answer questions and resolve problems. Integrity is important
Internet Experience: Make sure your prospective merchant account provider has extensive experience working with a wide spectrum of different of business models, both Internet startups and 'brick and click' enterprises.
Don't automatically assume a provider is legitimate just by what they have posted on their website or conveyed to you over the telephone. Here are some warning signals to watch out for and suggestions to test a provider's integrity:
- Repeatedly getting an answering machine every time you call.
- Representative seems to give you the run around every time you ask them a question about rates or their agreement.
- If they use one of those free web hosting services for their website and/or a free domain name (i.e. www.xyz.com/merchantaccounts/4876/5thave/index.html), look the other way. If they can't afford a real domain name and website, then they shouldn't be in business.
- Their website doesn't show which bank(s) they represent. It is unlawful for a merchant account provider not to show what banks they represent on their website. Visa and MasterCard cracks down hard on those who don't.
- They don't post all their rates and fees on their website.
Though the rates of some merchant account providers can really be very high, many of the cheaper solutions will end up costing you more in terms of poor service, inflexible limits, technical difficulties, or inept customer care. The important thing is finding the right balance.
First, competitive rates and reasonable fees are important, so make sure you do some rate comparison. Here's what you have to look at:
- Transaction Fees: A transaction fee is a fixed charge for every online transaction performed online.
- Discount Rates: A discount rate will be a percentage charged to you for every online sale you transact.
- Chargeback Rates: Chargebacks stem from returned or repudiated purchases. Chargeback rates are implemented to protect the merchant account provider in the case of returned merchandise or repudiated transactions. Your chargeback rate will take a percentage of your total monthly sales - and the specific percentage is determined by what kind of product or service you sell, as well as your chargeback history.
- Chargeback Fees: Some merchant account providers will charge you a fee (beyond your chargeback rate) for every chargeback you incur. If your business typically receives a disproportionately high amount of chargebacks, then chargeback fees - compiled with a chargeback rate - can prove harmful.
|
